The new Belgian Company Code voted and approved!

1. Restriction of the number of company types

The proliferation of company types will be reduced by the new Belgian Company Code to four basic types: the private limited liability company (BV), the limited liability company (NV), the cooperative company (CV) and the partnership. The legislator has chosen these four company types as from a legal point of view, the other types that exist can be derived from one of these four basic types, albeit with variations.

The partnership

The partnership will become the basic company type for companies without (full) legal personality. The partnership can be silent or temporary and, under certain conditions, can still acquire a legal personality and take the form of a limited partnership (Comm.V.) or a general partnership (VOF).

Private limited liability company (BV) 

The current private limited liability company (BVBA) will be renamed as the new, more relaxed, private company: Private limited liability company (BV). The private limited liability company (BV) will become the basic company type 'par excellence' for small to medium and large enterprises, which can also be easily used in an international context.
Under the new regime, this will be the most flexible - and capital-free - company type, where the main focus is on contractual freedom. This translates into seemingly limitless possibilities in terms of the type of securities that can be issued and in terms of transfer restrictions. The central notion is that it will be possible for partners to create a 'tailor-made' private limited liability company (BV) from their company.  A minimum capital will no longer be required when establishing the company. This 'relaxation' will also be offset by the requirement that, at the time at which it is established, the company has sufficient equity capital in the light of its intended activities and through the requirement of a stricter financial plan. To protect creditors, when the private limited liability company (BV) wishes to make a payment, it will always be required to perform a duplicate distribution test, known as the balance sheet test and the liquidity test.

Limited liability company (NV)

It is the wish of the legislator that the limited liability company (NV) will become the most appropriate legal form for the largest and quoted companies (notwithstanding the fact that, according to the new Belgian Company Code, a private limited liability company (BV) can also be quoted). Nevertheless, for most existing limited liability companies (NVs), it seems perfectly feasible that they can continue working under their current company type, even if they are not the size that the legislator had in mind for a limited liability company (NV).

The cooperative company (CV)

In turn, the cooperative company (CV) will return to its original reason for existence. A number of companies that actually operate with cooperation in mind will still be able to utilise this company type. The majority of cooperative companies today will not meet these conditions. They will be forced to operate under a different company type, in principle the private limited liability company (BV).

2. Possibility of a one-man board 

Under the new regime, it will be possible for both a private limited liability company (BV) and limited liability company (NV) to be established by one person, irrespective of whether this person is a legal person or a natural person. However, for the partnership at least two founders/partners are still required. Three founders/partners are also still required for the cooperative company (CV).

 3. An important change in terms of the board 

• In terms of the board, for the limited liability company (NV) quite a few innovations will be introduced by the Belgian Company Code. The limited liability company (NV) will be able to organise its board in three different ways: (1) one-tier board structure (executive board only), (2) two-tier board structure (supervisory board and governing council) and (3) one-man board the current regime for the private limited liability company (BVBA) shall continue to apply in principle to the private limited liability company (BV). The general rule is still one or more fully competent directors, with the possibility of providing a collegial governing body. 
• For all companies and associations, there is the possibility of providing day-to-day management. 
• The ad nutum revocability of the directors' mandates will continue to be the general rule in the new regime, but this is a default provision and therefore this rule can be deviated from and, if necessary, protection against dismissal can be provided. 
• In the event of a conflict of interests, in either companies or associations, the conflicted director(s) cannot participate in deliberation and voting regarding the decision or transaction concerned.
• Under the new regime, the contractual and non-contractual liability of directors of both companies and associations will be capped to a maximum amount; this amount is determined in accordance with the size (turnover and balance sheet total) of the company. There are, however, a number of exceptions to this cap on liability (such as in the event of intent to cause harm).
  

4. New criterion for distinguishing between companies and associations

From 1 May 2019, companies and associations will be regulated by the same Code. The classic distinguishing criterion of ‘profit motive’ will then be changed to 'profit distribution’. As a consequence, henceforth, associations will be able to undertake economic activities, they will be able to operate with a view to making profit and generate profits. The profit must, however, be spent on the association and may not be paid to the members, directors, founders or other parties, unless this is necessary in order to achieve the altruistic objective that is pursued.

5. Introduction of the 'statutory seat' doctrine

The new Belgian Company Code will bring an end to the 'actual seat' doctrine and the 'statutory seat' doctrine will be opted for. The consequence of this is that, henceforth, a legal person will be governed by the company law and association law of its statutory seat, even if it performs its activities elsewhere.
Please note: the 'statutory seat' doctrine only applies within company law and does not affect tax law, insolvency law and environmental law. 

6. Entry into force

As stated above, the new Belgian Company Code will be introduced in stages as from 1 May 2019, as follows:

As from 1 May 2019, the Belgian Company Code will apply in full to new companies and associations. 

• As from 1 May 2019, the existing legal persons can, if need be, take part voluntarily in the new regime (by means of an 'opt-in'). 
• As from 1 January 2020, the imperative statutory provisions shall, by operation of law, apply with immediate effect to existing companies and associations, such as the new descriptions and abbreviations, the conversion of the capital in the private limited liability company (BV) into a statutory non-disposable equity capital account, etc. 
• For the other legal provisions, the existing legal persons have the opportunity to wait until the next amendment of the articles of association before aligning themselves with the new Belgian Company Code, on the proviso that existing companies and associations will have to comply in full with the new Belgian Company Code by 1 January 2024 at the latest. 
• The existing legal persons with company types that will be discontinued because of the new Belgian Company Code, are subject to the same deadline. If these legal persons do not convert in time, by operation of law they will be converted into the most analogous legal form. 
• The transition from the 'actual seat' doctrine to the 'statutory seat' doctrine will take effect on 1 May 2019.
  

If you have any questions about the Belgian Company Code, please do not hesitate to contact one of our specialists at contact@vdl.be.